Hershey is a North American company that deals with the manufacture and marketing of chocolate, confectionaries and grocery products. The company was founded by Milton S. Hershey in 1894 making it one of the oldest chocolate manufacturers. Currently, Hershey has operations in some countries across the globe and is listed on the New York Stock Exchange. Its current president and CEO is John P. Bilbrey with a staff count of approximately
Generally, the capital structure shows different sources of funding that a company uses to finance its operations and growth. Most of the information used in calculating WACC have been sourced from: Hershey Company Website, the Company’s annual report date February, 2015 and Yahoo Finance.
A capital structure entails: Long-term debt, short-term debt, common equity and preferred equity.
Using the company’s capital. The weighted average cost of capital (WACC) can be calculated. WACC is used as an investment decision-making tool in company’s project evaluation. Using WACC; projects of the same risk can be evaluated, the viability of a project can be measured by comparing the project’s rate of return and the WACC. It represents the average risk faced by the organization.
We will first calculate the weight of equity (weight of common and preferred equity) and weight of debt (wd)
Weight of equity = weight of common equity,(ws) + wei…
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